Palin, a Republican, was elected governor in 2006. She was tapped as Arizona Sen. John McCain's vice presidential running mate last year.

Palin said she was transferring authority to Lt. Gov. Sean Parnell, who will be sworn in on July 26.

"People who know me know that besides faith and family, nothing's more important to me than our beloved Alaska," Palin said at an announcement from her home in Wasilla.

"Serving her people is the greatest honor I could imagine."

Palin added in a statement that she was "determined to take the right path for Alaska even though it is not the easiest path. ... Once I decided not to run for re-election, I also felt that to embrace the conventional 'Lame Duck' status in this particular climate would just be another dose of 'politics as usual,' something I campaigned against and will always oppose."

A Republican source close to Palin's political team told CNN's John King that it was a "calculation" she made that "it was time to move on."

The governor's "book deal and other issues" were "causing a lot of friction up" in her home state, the source said, adding that he believes that she is "mapping out a path to 2012."

Another source, speaking on the condition of anonymity, said that Palin "thinks she has accomplished goals she has set forward. ... She sees what a positive influence she has had on people's lives from traveling the country in the last year."

As the 2008 GOP vice presidential nominee, Palin has been considered one of the front-runners for the next GOP presidential nomination. Her decision not to seek another term as governor is sure to stoke speculation that Palin is seriously eyeing a run for the White House.

In an interview last month with CNN's Wolf Blitzer, Palin said she was unsure about her re-election bid because she needed to focus on her state and her family.

"So, no decision yet on either 2010 or let alone 2012?" Blitzer asked.